Judge Scolds Feds for Not Turning Screw in PG&E Criminal Case

SAN FRANCISCO (CN) – A federal judge scolded a federal prosecutor Wednesday for refusing to take a stand on whether Pacific Gas and Electric should be placed under more stringent probation conditions for failing to meet required safety targets.

“Are you just going to let California burn up because the offender here is running wild over the people of California,” U.S. District Judge William Alsup said. “You shrug your shoulders and say, ‘We can’t do anything about it?’”

(AP Photo/Jeff Chiu, File)

Assistant U.S. Attorney Noah Stern said his office only has expertise in identifying and prosecuting federal crimes, not fashioning probation terms such as those proposed by Alsup last month. The judge has proposed forcing PG&E to hire enough workers to clear all hazard trees and limbs near its power lines and denying PG&E executives bonuses unless it meets fire risk reduction targets.

During a two-hour-plus hearing Wednesday morning, PG&E lawyers implored Alsup not to impose such probation conditions, arguing they would do more harm than good.

Like most utility providers, PG&E relies on contracted labor to trim trees. Forcing the company to bring even part of that labor force in house would exhaust its limited resources at a time when the company is working to upgrade its system and push forward an enhanced tree trimming and removal program, PG&E lawyer Kevin Orsini said.

“If we have to have PG&E hire them, we have to build the infrastructure, administrative backbone,” Orsini told the judge. “We have to fundamentally change the processes in place now.”

According to Orsini, the company is working with local governments, state agencies and labor unions to recruit more tree trimmers and inspectors amid a nationwide labor shortage in that field. PG&E has also partnered with community colleges to create a tree trimmer and inspector certification program.

The company reported that in 2019 it increased its workforce of contracted tree inspectors from 580 to 1,375 and raised the number of contracted tree trimmers from 1,400 to 5,437.

Despite those arguments, Alsup stayed firm in his belief that the company could benefit from bringing part of that operation in-house.

“You ought to have your own crews and your own trucks in addition to the contractors,” Alsup said.

Turning to the issue of executive bonuses, PG&E attorney Reid Schar argued that decisions on compensation for managers should be left to state regulators, lawmakers and the federal bankruptcy court. He said the state made clear in passing Assembly Bill 1054, which created an insurance fund for future wildfires, that a private utility’s financial viability is a key component of its ability to deliver safe, reliable and affordable energy.

The current proposal calls for the same employee bonus criteria approved last year, which includes 65% focused on safety, 10% based on customer service and 25% for financial performance.

“We don’t know any other utility that does purely 100% safety,” Schar said.

Also on Wednesday, Alsup demanded PG&E address a report of a worn C-hook on a transmission tower close to one where a C-hook snapped in 2018 and caused the most destructive wildfire in California history, the Camp Fire.

Thomas Scott Hylton, an expert hired by the Tort Claimants Committee, which represents fire victims in PG&E’s bankruptcy case, identified a worn C-hook that was inspected twice in 2019 but not flagged as requiring replacement.  A drone inspection and climbing inspection found no problems, but after PG&E was alerted about the issue, the C-hook was flagged as requiring replacement within one year.

Orsini suggested workers who conducted those inspections may have simply concluded the wear did not rise to the level of requiring attention within a 12-month time frame. The judge was unsatisfied with that answer.

Alsup griped that PG&E often gives “answers like this,” putting the “best possible spin” on an issue that requires serious inquiry.

“I have a feeling that you missed it totally,” Alsup said. “That inspector goofed. We could have had fatal consequences.”

Attorney Kimberly Morris, of the Tort Claimants Committee, said her clients are concerned that inspection records may have been falsified. PG&E was convicted in 2016 of obstructing an investigation and five counts of Pipeline Safety Act violations related to the deadly 2010 San Bruno gas line explosion. Some of those charges related to PG&E knowingly relying on flawed records to make safety decisions.

In 2018, the California Public Utilities Commission also found PG&E falsified thousands of records to make it look like the company responded in the time required by state law to requests to locate and mark underground gas lines prior to excavation projects.

Orsini insisted no evidence exists to support claims that transmission tower inspections were falsified, but Alsup refused to ignore the possibility.

“Who knows what goes on in the biles of this gigantic company,” Alsup asked. “What are the incentives put in place?”

Alsup demanded PG&E interview the inspectors and submit a detailed report to the court, adding that if he is unsatisfied with that report, he will drag the inspectors in to testify in open court.

The judge thanked the Tort Claimants Committee for raising concerns about the inspections.

“You have done a very good public service in bringing this to my attention,” Aslup said before adding a denigrating postscript aimed at federal prosecutors.

“The U.S. Attorney’s Office is just attending,” Alsup said.

Despite his harsh words for PG&E and prosecutors, the judge praised the beleaguered utility for one accomplishment – the fact that no fires were sparked by trees or limbs hitting its distribution lines in 2019.

Though PG&E has faced widespread criticism for its handling of fire-prevention power shutoffs, Judge Alsup said he believes the unpopular blackouts saved lives and property last year. PG&E reported 365 trees or limbs fell on power lines that were de-energized during power blackouts in October and early November last year.

“PG&E deserves some credit and recognition despite all the blame they are getting for public safety power shutoffs,” Alsup said.

Though its record on keeping distribution lines safe from fire hazards was much improved, a broken jumper cable on a PG&E transmission line was suspected of starting the Kincade Fire in Sonoma County last year.

The judge also voiced concern about what will happen in two years when PG&E’s five-year probation term ends. He said structural change is needed to eliminate incentives for PG&E to defer maintenance in favor of executive bonuses and stockholder dividends.

“We’re in a critical chapter,” Aslup said. “The governor ought to be looking at this.”

PG&E rolled out an amended bankruptcy plan last month that seeks to appease California Gov. Gavin Newsom’s demands for corporate governance reforms and greater emphasis on safety and accountability. Despite those changes, a lawyer for the governor’s office said last week Newsom still opposes PG&E’s plan to finance its exit from bankruptcy.

Lawmakers and local leaders are also pushing to turn PG&E into a state-owned utility or break it up into customer-owned cooperatives and municipal utility providers.

Regardless of how PG&E emerges from bankruptcy by a state-imposed deadline of June 30, Judge Alsup said he will continue to use his position to keep the company in check for the next two years.

“While they are under my supervision, I’ll do everything I can to protect the people of California from more death and destruction from this convicted felon,” Alsup said.

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